Credit Scores

How does credit score affect your mortgage rate?

Businessman's hands with calculator and cost at the office and F

Businessman's hands with calculator and cost at the office and FAs we grow older, we become more focused on our finances. It is inevitable that this is going to happen since we are thinking not just for our futures but also, for the future of our loved ones. Millennials are growing families and settling down, while the baby boomers are setting themselves up for a comfortable retirement. Mortgage rate can affect both generations and unless you know the basic facts about credit scores, chances are you’ll be paying more than necessary.

What affects credit and what are the negative impacts?

If your credit rating is in the green, you have done pretty well. You have to be a pretty organized individual (unless you have had help from an accountant) to stay in control of what is going in and what is coming out of your bank every month. The darker the shade of your credit rating, such as red, the worse it is.

Let’s take a look at the things that can have an effect on your credit score:

– Making late payments

– Failure to make payments

– Taking out multiple loans/credit cards and failing to make payments.

When a lender looks at your credit score, they may dismiss your request to finance with a mortgage immediately. The reason for this is because you will look unreliable and will be untrustworthy for repaying in a timely manner. This is not to say that you will be turned down completely, but you will have to prove your borrowing capability to be reconsidered.

Advantages of Financing with a Mortgage

If you have discovered that your credit score is not so great, you can consider an alternative financing option. Whichever route you go down, you would be wise to absorb the pros before looking at the cons.

Here are the upsides associated with this mortgage financing option:

– Home ownership is made affordable.

– It is a cost-effective form of borrowing for mortgage financing.

– Take advantage of lower interest rates.

– Convert a variable loan rate to a fixed one.

Disadvantages of Financing with a Mortgage

Although there are advantages associated with financing a mortgage that you ought to be aware of, it is equally as important that you familiarize yourself with the disadvantages.

Here are the downsides associated with this mortgage financing option:

– The fees you pay for mortgage refinancing can cause your savings to reduce quite rapidly, depending on the lender and the circumstances.

– There is a chance that you will not be accepted if you do not meet the standard lender criteria.

No matter how bad your lending and credit history is, remember that there is always a solution. You can accomplish a number of new lifestyle-changing tasks that will contribute to your lending ability, such as paying back debts to overdue lenders, calculating your monthly mortgage payment, spend less, save more, and don’t bury your head in the sand.

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Evolution of Online Mortgages

Young people move into a new apartment.

Young people move into a new apartment.No longer are people spending months upon months trying to find a mortgage that suits them. With the rise of the Internet and its billions of active worldwide users, the capabilities for mortgage hunters is increasing. Now, we are in the age of millennials, when people in their 30’s are making the decision to find a place where they can settle down, raise a family, and feel comfortable in their surroundings.

Homeownership is not only about finding somewhere to call “home” though. For many, it presents an opportunity to invest in their future and broaden their business horizons. Whatever the reason(s) you might have for wanting to take out a mortgage and start living like an adult, let’s consider the growth in online mortgages for a moment.

How have home loans changed over the years?

In the past, making a down payment was a difficult part of the process. Typically, this down payment would be a significant chunk of the total property price. Millennials are confused and believe that renting could relieve them from financial burden. As a matter of fact, loans nowadays have changed in the following ways:

– Interest rates have fallen and making a low down payment has become easier.

– A normal pattern in lending seems to have re-emerged since the last economic downfall.

– Although the strictness of lending terms has not eased, down payments have.

– The lower of two people’s credit scores is considered for a home purchase, nowadays.

– Investors are opting for single-family homes as opposed to obtaining finance for larger property purchases.

As inflation and deflation rates fluctuate and since the property market is unsteady at times, it is inevitable that online mortgage trends will continuously adjust, in some way or another. Staying in the loop will ensure you make the right financing decision.

How has the online mortgage process changed?

These days, the process will start with a loan estimate and credit report check. Unlike in previous times when technology was not so advanced, the process is actually much more straightforward. All it requires is an Internet connection, some in-depth research and most importantly, patience. Seeking out the best deal requires patience and it is imperative that you compare interest rates if you want to spend less in the long-run.

What affects mortgage approval today?

Whether you want to face facts or not, mortgage approval has changed and will continue to do so. Lenders focus on patterns in repayment and base them on a set of criteria. This criteria will determine if you are approved for home financing or not and it is as follows:

The debt-to-income ratio - A few finances that count towards the debt-to-income ratio include car loan payments, student loan payments, child support, etc.

Credit scores and spending history/habits - Repay some outstanding debts and lenders are more likely to approve you for an online mortgage.

Job stability – If you cannot hold down a job and lack regular income, your approval rate will be low.

Within the space of a few minutes, you can search for the financing and remortgaging options that suit you. Thanks to the World Wide Web (WWW) and the fact that it can be accessed on the move, and on a variety of devices, mortgage hunters can check the updated rates. Furthermore, they can make themselves aware of rate fluctuations.

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Short Sales vs. Foreclosures: What’s the Credit Score Impact?

There are many reasons you may be having a hard time paying your mortgage and it’s certainly stressful to be in a position where you may lose your home. You do have options available to ease your financial burden, including a short sale of your property. But if you don’t take action, the lender may foreclose upon your home. Both short sales and foreclosures will impact your credit score, so it’s important to understand the implications.

The Impact of a Short Sale on Credit Ratings: A short sale is a transaction where the borrower requests that the mortgage lender accept a loan repayment for less than the full amount. In most cases, you’ll have to provide proof of a financial hardship that impacts your ability to pay or that you’re being forced to relocate for your job. (more…)

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7 Simple Ways to Strengthen Your Credit Score

Whether you’re looking into buying a home soon or will be considering it in the future, it’s smart to stay on top of your credit score. Not only is your credit report important for obtaining a low interest rate, but a good one is essential if you want to qualify for financing. The goods news is that, even if you’ve had some problems in the past, there are ways to strengthen your credit score in advance of making a large purchase. Here are a few simple tips on how to do it.

Keep a close eye on credit card balances. One primary number that factors into your credit score is how much you have compared to how much you use. Try to maintain a 30 or lower utilization ratio, i.e., use about 30% of your available credit to avoid a negative impact on your score.  (more…)

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How Important is a Good Credit Score

How Important is a Good Credit Score

How Important is a Good Credit ScoreIf you’ve ever been turned down for a credit card, car loan, home mortgage or other loan, you probably realized too late that it’s important to have a good credit rating. Your financial history follows you everywhere you go for years, impacting aspects of your life you never considered when you skipped a utility payment or allowed a loan to go into default. Here are just a few reasons to maintain a good credit score – or make repairs to a poor one.

You’ll need a high credit score for most mortgages. Most homebuyers will need to obtain financing to purchase a home, which means approaching a lender for a mortgage. Lenders need to consider risk factors when issuing loans, as foreclosures and short sales cost them money. Banks seek to reduce their risk, so they’ll usually only work with borrowers that have good credit.  (more…)

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How to boost your credit score

How to boost your credit score -Paramount Equity®

Credit Score-Paramount Equity®So, you’re finding yourself at that point in life where you want to buy a home or a condo, but your credit score is a little bit lacking. It’s not great, but it’s not perfect, either. The goal is to get a better credit rating, which means you’re going to have to do some footwork; reports don’t fix themselves. Remember that increasing your credit score does not happen overnight, but it does get better as long as you are proactive. Get a copy of your credit report and get a word processor ready. You’re going to be doing some work while learning how to boost your credit score.

Following are five tips that help you improve your overall score:

  1. Examine your credit report with a fine-tooth comb. Mistakes are frequently found on reports, and they stay there until you challenge them. There are plenty of template letters you can use to dispute, or (more…)
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I Have Bad Credit – Can I Buy a Home?

hayes_barnard_bad_credit_mortgage

Buying a home with bad creditPurchasing a home is a dream for many people. Whether you are an individual or raising a family, home ownership is a great way to build wealth. However, it generally takes a good credit score to get a home loan. Here are five things to consider if you are looking for a home loan with bad credit.

1. Put More Money Down On The Home

Most banks require at least 10 percent of the purchase price upfront. Putting down 20 percent of the purchase price shows you have the means to make timely payments.
Coming up with more cash also lowers the risk your lender is going to take. Giving you a loan for $80,000 is less risky as opposed to making a loan for $100,000.

2. Think About A FHA Loan (more…)

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7 Building blocks of good credit

7 Building blocks of good credit -Paramount Equity®

Building your credit - Paramount EQuityThe building blocks of good credit are simple and attainable. Follow a few basic rules, and you can establish and maintain a great credit score. Setting yourself to the task today of building good credit will enable you to enjoy the most desirable long term credit scenarios. Here are 5 time-tested techniques you can implement at any time.

  1. Access Small Amounts Only. This is one of the most basic building blocks of good credit, but also the hardest. In our gotta-have-everything-now culture, the temptation to splurge on materials, goods, and services at the expense of your personal credit is overwhelming. Resisting this urge will provide you with years worth of excellent credit, more credit choices at lower rates and higher amounts. Aim to consistently use no more than 30-50% of your credit limit.
  2. Baby Steps. Remember all the times mom scolded you for eating too fast at the table? One slow step at a time is a responsible pace for building good credit. Don’t accept every card you’re offered. Envelopes arriving in the mail with pre-approved cards should be treated like the plague. (more…)
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